History : British Leyland, the grand illusion – Part Two

Ian Nicholls, AROnline’s historian-in-residence, follows up his excellent run-down of the British Motor Holdings story with a five-part account of the British Leyland years from 1974 to 1977.

In the second part, we learn all about British Leyland’s Government bail-out, the Ryder Report and see the reactions to it from the Government, from industry and the unions. Not everyone thought it was a great idea at the time…

Owned by the people on behalf of the people

On 6 December 1974, Tony Benn, now Trade and Industry Minister, announced to Parliament that, ‘Discussions have been taking place with the company regarding both its short-term requirements for working capital and its long-term investment programme.

‘Because of the company’s position in the economy as a leading exporter and of its importance to employment both directly and through the many firms that are dependent on it, the Government are informing the company’s bankers that the approval of Parliament will be sought for a guarantee of the working capital required over and above existing facilities. I am satisfied that this will enable the company’s requirements to continue to be met without interruption.’

‘In response to the company’s request for support for its investment programme, the Government also intend to introduce longer-term arrangements, including a measure of public ownership. In order to help the Government in framing a scheme for this purpose, they propose to appoint a high-level team, led by Sir Don Ryder (above), including members drawn from the Industrial Development Advisory Board, to advise on the company’s situation and prospects, and the team will consult the company and the trade unions in the course of its work.

‘If the Government are required to put substantial sums of money into British Leyland in view of its importance to our national economy, it is quite right that the taxpayer in making that contribution should get with it an appropriate measure of public control and accountability.’

The Westminster reaction to BL’s bail-out

Labour backbenchers cheered Mr Benn’s rescue operation, which would provide overdrafts and a cash injection, and were really elated at this chance of massive State intervention.

Conservative opposition spokesman Michael Heseltine said: ‘The problem is that once you have the Government involved in a company it becomes regarded as a bottomless purse and there is less incentive to solve the problems.’

When British Leyland was founded in 1968 by the merger between the Leyland truck and bus giant and British Motor Holdings, the shares were 60p each. At one time they reached 92p. Then the slide began. In 1972 Lord Stokes called on his Shareholders to put up an extra £50m of new capital to back his ambitious expansion plans. The faithful chipped in 45p for each unit, only to see them slide to 7p each.

The investors had seen precious little return on their money, since the company was formed, profits had averaged only 5p a year after tax on every £1 of capital tied up in the business. British Leyland was about to become a political football, the so-called post-war political consensus was a myth. Labour left wingers and the trade unions advocated full blown nationalisation and workers control. This was at a time when Triumph had been strike bound for two weeks.

One picket said: ‘I would sooner see the firm go under and the Government take over than the men give in. It’s a fight to the finish.’

The intervention of the Government did little for British Leyland’s fortunes. In January 1975 the Cowley engine tuners went on strike. In a speech the Prime Minister, Harold Wilson, said: ‘Parts of British Leyland are profitable, others are not… But public investment and participation cannot be justified on the basis of continued avoidable loss-making…

‘Our intervention cannot be based on a policy of turning a private liability into a public liability… The achievement of that aim does not depend on the action of the Government alone… In a very real sense the success of public intervention to fight the threat of unemployment means a full contribution, a fair day’s work for a fair day’s pay by everyone for whose security we are fighting. The wider and wholehearted participation of those whose future rested on the success of the Government’s decisions.

‘What is not a matter for argument for the future is this. With public capital and an appropriate degree of public control involved, the Government could not justify to Parliament or to the taxpayer the subsidising of large factories involving thousands of jobs, which could pay their way, but which are failing to do so because of manifestly avoidable stoppages of production.

‘What is at stake in Britain in 1975 and the year after that is the future of the employment of our people. That, from now on, depends not only on Government finance and participation but on the wider and wholehearted participation of all those whose future and whose families’ future depend on the success of the decisions the Government has taken and will take, and which they intend to see through.’

Mr Leslie Huckfield MP, a Labour backbencher, said Mr Wilson’s remarks showed that be knew very little about the car industry. He went on: ‘If he talked to any of my constituents working at Jaguar, Triumph, or Morris Engines in Coventry, he would find that there is a real determination to make British Leyland succeed, especially under public ownership.

‘The real culprit is the chronic failure of management to invest when Continental car workers have twice as much investment at their elbow as those who work for British Leyland. These are the comparisons that the Prime Minister ought to be making instead of blaming my constituents.’

The lack of investment was a pet subject of the left. While it was certainly true, British Leyland had mortgaged itself to the hilt to invest what it could and now the banks had called time. And how could British Leyland generate cash if it was strike bound?

New models – a new beginning?

Princess nee Austin-Morris 18-22 Series was British Leyland’s first car under Government ownership

On 26 March 1975, the ADO71 was launched as the Austin Morris 18-22 series. BLMC replaced the boxy Landcrab with Harris Mann’s startling and futuristic wedge-shaped saloon. A waiting list soon built up. The ADO71 was by far the best of the Leyland-financed replacements for the Issigonis front-wheel drive cars and was, if anything, better than the outgoing ADO17.

The ADO71 had two drawbacks. It was hopelessly under-developed – no doubt a result of British Leyland’s stretched finances – and it was built at Cowley, perhaps the most militant plant in the British Leyland empire. During 1974 and 1975 Cowley became a byword for strikes, low productivity and poor industrial relations.

After six months of stoppages and warranty claims, when the waiting list had evaporated, the range was re-branded as the Princess. The relative failure of the ADO71 meant that BMC/Austin Morris had now shot its bolt. There could be no massive expansion into the wider European market because consumers did not want to buy the product in sufficient numbers and so, as in 1968, salvation seemed to be in the shape of yet another new generation of models, this time funded by the taxpayer.

On 22 April, the Cabinet discussed the Ryder Report. The Government was having to make public expenditure cuts at the time and was being asked to invest a minimum of £1.4bn in a company valued at £60m and there would be no return on the money for at least seven years. The Government recognised the need to reduce over-manning but also had regard for plants in assisted areas such as Scotland and Wales.

The Government as the majority shareholder could influence the expansion or contraction of these plants. In other words, scattered plants like Bathgate, Llanelli and the Rover transmission factory at Pengam, Cardiff were safe from closure if the Government saw fit to veto such moves.

The choice was… no choice

Tony Benn argued that it was essential to keep British Leyland going in order to stop car imports. However, the Chancellor of the Exchequer, Denis Healey, warned that the Government was committing as much as £2.8bn over seven years and Harold Lever saw it as a grandiose folly with no guarantee of success. In reality the Government had no choice but to nationalise British Leyland or face the prospect of mass unemployment.

The next day, Derek Robinson, the Co-chairman of the combined British Leyland Shop Stewards’ Committee and Convener at Longbridge, said in Birmingham: ‘We would agree with compulsory redundancy for one section at British Leyland, that is management, like Stokes and Barber. ‘Sheer mismanagement is responsible for the mess we are in at British Leyland. We would wholeheartedly endorse the removal of British Leyland top management and their replacement by competent people.’

On 24 April, the Ryder Report was unveiled. Sir Don Ryder knew which side his bread was buttered on and delivered the kind of report his political masters wanted. The report was ludicrously optimistic, predicting that British Leyland would maintain its existing market share (UK 30.9 per cent) well into the 1980s, advocating injections of taxpayers, money to replace the firm’s outdated equipment, worker participation and centralisation of management. The company would be divided into four divisions.

British Leyland Cars

British Leyland Trucks and Buses

British Leyland Special Products

British Leyland

The report did call for a ‘contribution from the workforce in agreeing to manning reductions and greater mobility and inter-changeability of labour.’ The report also demanded that, for every £1m provided by the National Enterprise Board, British Leyland’s car manufacturing had to find a further £1.5m out of profits.

It went on: ‘Our forecast is that BL’s profits as a percentage of sales should improve to 11 per cent in 1981/82 compared with an average of 6.5 per cent in the period 1968/69 to 1973/74. BL’s return on capital employed is also forecast to improve to 19.6 per cent in 1981/82 compared with an average of 9.6 per cent in the period 1968/69 to 1973/74. While we recognize that this is not a satisfactory return, it must be appreciated that it is caused by the past massive under-investment. After 1982 BL should start to reap the benefits of the new capital expenditure programme.’

The Ryder Report made the same mistake that the politicians and analysts had made back in 1967/68 when BLMC was created. This was the naïve belief that simply throwing money at the problem would make it go away. The assumption was that consumers would blindly buy the company’s products regardless of their individual merits.

Casualties of war

There was no place for Managing Director John Barber in the new nationalised British Leyland. He was replaced by Finance Director Alex Park. John Barber, when he himself was Finance Director of BLMC, had repeatedly and publicly warned that the company’s performance was not good enough. His reward for having his finger on the pulse was to be made the Ryder Report’s scapegoat.

The Government proposed to take a majority shareholding while agreeing with the report’s recommendation that it should offer to buy out existing shareholders at 10p a share and underwrite a new rights issue to provide fresh equity capital of £200m.

The Prime Minister, Harold Wilson, told the House of Commons: ‘I would like to make it clear from the outset that, following the initial injection of equity capital in 1975; the release of further stages of Government funding will be determined in the light of the contribution being made to the improvements in the performance of British Leyland by better industrial relations and higher productivity.

‘The company employs over 170,000 people directly in this country, and the livelihood of several hundred thousand more is dependent on it. I have to tell the House that in this decision a million jobs are at stake.’ – Harold Wilson

‘This is a condition to which the Government attach great importance. The House should be in no doubt about the significance of this company to the national economy and the importance of putting it on to a sound basis. British Leyland is our biggest exporter; last year its direct exports from this country amounted to almost £500m. The company employs over 170,000 people directly in this country, and the livelihood of several hundred thousand more is dependent on it. I have to tell the House that in this decision a million jobs are at stake.

‘The choice before the Government was stark but unavoidable. If we had let course and allowed the company to slide inevitably into receivership, or if we had permitted savage reductions in its size with its production effectively confined to a specialized range of vehicles, then there would have been a major loss of confidence, at home and abroad; not only in British Leyland but in British industry as a whole.’

The union reaction to the bail-out

Mr Harry Urwin, Assistant General Secretary of the TGWU and a member of the National Enterprise Board, described the machinery then being used by BLMC as ‘a disgrace to the British motor industry’ and commented that, far from being malingerers the workforce at British Leyland was, because of old-fashioned equipment, having to work harder than others. The powerful British Leyland shop stewards’ movement would have a key role to play in the improved labour relations which the Government was demanding. Their leaders were delighted with the absence of mass redundancies, but gave a mixed reception to the rest of the proposals.

Eddie McGarry, Joint Chairman of the combined British Leyland Shop Stewards’ Committee and Convener at Triumph Coventry, said: ‘We would have preferred outright nationalization but we are delighted that the only reference to cuts in the labour force talks of more realistic manning levels. We cannot see any redundancies arising as a result of this because, given an injection of capital of this magnitude to invest in new equipment, we shall be able to gear ourselves to higher output ready for the expected improvement in world markets. I think you will find now that all the indecision about our future has been swept away, the trade unions will match up to whatever responsibility is laid at their door.’

Derek Robinson: ‘I welcome the Government’s general approach to take over British Leyland

His Co-Chairman, Derek Robinson, said: ‘My reactions are rather mixed. Firstly, I am delighted that they are not proposing wholesale redundancies. I welcome the Government’s general approach to take over British Leyland in this way and inject a lot of money over the next three years. We accept the implied philosophy that after three years the new British Leyland should be able to generate sufficient profits to provide for its own needs.

‘The removal of the present top management, the reduction in central staff and the establishment of four separately run companies all looks very promising. But I am sure shop stewards will want to reserve judgment until we know who the new managers are. We told the Ryder committee that we would like to see these men appointed jointly by the Government and the unions. The proposed works committees fall well short of the degree of participation we asked Ryder for and I fear that they would not be strong enough to motivate workers.’

Brian Mathers, the senior full-time official of the TGWU in the West Midlands, added: ‘This massive injection of capital should at last give British Leyland a chance to become a major, force in the world’s motor industry. It will end the uncertainty and the insecurity that has prevailed for so long and undermined morale. I believe workers will respond to the conditions which require improved labour relations in return for staged capital investment.

‘The fact that the new structure does not call for compulsory redundancy and closures should provide the right atmosphere for more co-operation between management and workers… Now the company has a fighting chance. The workers will make it succeed.’

Graham Turner, author of ‘The Leyland Papers’ wrote in the Daily Express newspaper: ‘I believe Lord Stokes walked away from the crucial over-manning problem – with the result that, in the first five years of the corporation’s life, the work force actually went up instead of down.’

‘It was in those years, I believe, Stokes could without brutality have pruned 40,000 out of the labour force. This would have made a difference of £80m a year to the company’s cash flow and might well have saved it from falling into Government hands. The company tried to behave as though it were a British General Motors, with operations in just about every market in the world.

As a result it spread its limited cash far too thin and robbed the home factories of much needed money for modernisations. Top management never unscrambled the vast mass of factories and facilities it inherited. The key Austin-Morris division remained a managerial shambles for far too long. The models it turned out fell well below the quality required, cost control was poor, labour relations bad. There was virtually no response from the trades unions to Stokes’s generosity on manning levels. With staggering irresponsibility, they took it as a symptom of softness and made some plants a by-word for feather-bedding and skiving.’

Graham Turner gloomily predicted: ‘The worst thing that could happen now is for the Government to nationalise Leyland in such a way that it became part of the Welfare State, perpetually dependent on handouts from us, the taxpayers. That would simply mean everybody lying back and waiting for the regular Government cheque and none of the things that should be done, would be done. It would create a condition of built-in somnolence.

‘What the Government must do is create a climate in which Leyland’s managers are given the backing and muscle to tackle its problems, particularly overmanning. If not, public money will be poured down the drain year by year. The company, unable to stand on its own feet, will become little more than a gilded industrial sanatorium.’

British Leyland’s gross profits over the previous seven years had been a mere £200 million on a revenue of £8.52bn, barely 2.35 per cent per annum.

Left wing reaction to the bail-out

The left-wing Tribune newspaper reviewed the Ryder Report. ‘The Ryder Report on British Leyland published last week delivers a stunning blow at the incompetence of the company’s management. Possibly the most startling fact to come out of the report is the evidence on what British Leyland did with its profits. Over a period of seven years, BLMC made a net profit of £74m and gave £70m of this away in dividends to shareholders. In other words, only £4m of the company’s profit was ploughed back into investment.

‘From the shop floor, focus of the report moves to the executive suite and take a detailed look at how company’s top management was structured. The main point of criticism concerns the fact that there were 14 Operations Managers reporting to the Managing Director. As any first-year student in business management knows there should never be more than seven managers responsible to the Managing Director. The load is not only impossible to bear but far too much one man to deal with adequately.’

The comment about the shareholders dividends was a veiled critique of the principle of private ownership. The role model for the new state-owned British Leyland was the huge nationalised Renault concern in France, then enjoying vibrant sales of its Renault 5 supermini, which dwarfed that of the Issigonis Mini at its zenith.

British Leyland to learn from Renault?

Renault 5: an object lesson for British Leyland?

To the left, Renault demonstrated it was possible for the state to own a successful and profitable motor manufacturer. However, there was a vital difference: British Leyland had been nationalised because it was a failing business whereas Renault was a successful company which was nationalised in late 1944 because of the alleged collaboration by its founder, Louis Renault, with the occupying Nazi regime.

The post-liberation provisional Government that expropriated Renault was led by General Charles de Gaulle, who was no socialist. The change of ownership did not alter the management culture within Renault, which continued to flourish post-war.

In a speech the Trade and Industry Minister, Tony Benn, said of British Leyland; ‘Attempts to blame workers for the state of the company are superficial, offensive and do not merit serious consideration. The real fault is a chronic lack of investment over many years. The Ryder Report has identified this lack in the manufacturing industry as having brought one of Britain’s greatest firms almost to its knees. The choice now is to pull out of the British motor industry involving directly 160,000 jobs and affecting nearly a million jobs altogether—or to undertake a major re-equipment programme involving public ownership and a major advance in industrial democracy.’

Margaret Thatcher: ‘Government was wrong…’

The new leader of the opposition Conservative Party Mrs Margaret Thatcher said of the Ryder Report: ‘Its proposals put massive obligations on the taxpayer in return for very little from the firm and no commitments whatsoever from the unions. We therefore believe that the Government was wrong in so hastily accepting the report. The Government must show much greater awareness of the interests of the taxpayer and of the rest of the economy, on whom the burdens of such assistance have to fall.

‘The basic principle of Government policy, for British Leyland, as for any other ailing firm, must be to find a recipe for success. Unless we can ensure a flourishing and competitive industry capable of producing a product at a price people will pay, it is not only the future of British Leyland that is at stake, but the very standards and standing of the British nation itself ‘.

These were the contrasting views of two politicians who would dictate the political agenda in the years ahead. Love them or loathe them, their conflicting world views would form the core of their respective parties’ policies on offer to the British electorate in the years to come. Soon after this the key appointments were made in the new state-owned British Leyland Limited.

The most important was that of Derek Whittaker (left) as Managing Director of the car division, now called Leyland Cars. It has been remarked by Sir Michael Edwardes in his memoirs that British Leyland was effectively micro-managed by the newly enobled Lord Ryder from his National Enterprise Board office.

This argument has some credence. Why did Ryder choose two relatively inexperienced motor industry executives in the form of Alex Park and Derek Whittaker for such a political and industrial hot potato?

In a parliamentary debate on British Leyland on 21 May 1975, Maurice Edelman, Labour MP for Coventry North West, which included Jaguar, said: ‘The idea of some sort of hybrid company, part private enterprise and part Government participatory would not work in the long run because the two philosophies inherent in such a company were contradictory.

‘What we should have done, and we might yet have to do, is to nationalize British Leyland. There was in Britain, unhappily, a sort of bran tub syndrome, a collection of illusions leading to the belief that somehow or other the public purse was inexhaustible. There must be a much more austere attitude to public expenditure. Unless they had a workforce which was prepared to accept the consequences of modernisation and re-equipment sustained by genuine industrial democracy, the Ryder Report would not work.’

Would the Ryder Report work?

Then on 10 June 1975 there was a Cabinet reshuffle. It was this that revealed Harold Wilson’s real attitude to the shift to the left in his Labour Party that had occurred since 1970. The Trade and Industry Minister Tony Benn switched places with Energy Minister Eric Varley (below). This was effectively a demotion for Tony Benn, who had helped to formulate the party’s industrial policy.

Harold Wilson was an election winner. He had that sixth sense that knew what the electorate wanted and he calculated that was not massive state intervention in all walks of life. It could be argued that Labour’s full-blown Socialist manifesto had denied them a convincing mandate in the 1974 General Elections at a time when the trade unions role in society was a political hot potato.

Clearly the party had lost a lot of support since its thumping 1966 General Election victory. Eric Varley was no charismatic, silver-tongued politician who painted a rosy view of the future in which everybody would work together to create a Utopian paradise, but he was a pragmatic minister that took a realistic view of the problems confronting the country.

The Cabinet re-shuffle was a courageous move for Harold Wilson, for Tony Benn had become the poster boy for a great number of rank and file Labour Party members with his natural charisma and enticing world view.

In July 1975 the BLMC shareholders accepted the Government’s offer for their shares. Lord Stokes said: ‘It is the Government who calls the tune. This is a very sad moment for me but we live in difficult times and the best thing we can do is to accept the situation as it is. Under the circumstances the Government offer is as much as we can get.’

Lord Stokes said they had tried every possible alternative. ‘We tried to see whether we could hive off Austin-Morris or even give it away.’

This was a remark that seemed to escape motoring historians. He had been to the Middle East to see whether anyone would put money into British Leyland, ‘but people are against investing in labour intensive industry in Britain today.’

City financier and British Leyland Director Jim Slater told the shareholders why their firm was broke. Waving a page from the Daily Mirror, Mr Slater said one reason was that ‘our labour is the least productive in the world.’

He quoted figures printed in the Daily Mirror on 26 June 1975 showing that production from workers in key British industries was lower than many European competitors. ‘In cars we are less than half as productive as others, in railways less than a third, in steel two-fifths, in shipbuilding a third, in coal a quarter,’ he said.

Mr Slater backed the Government rescue bid for British Leyland. The Daily Mirror reported on the declining fortunes of British cars in overseas markets. It said that British cars were shunned because of bad workmanship, unreliability, poor delivery dates and difficulties with spares.

The importer’s view of British Leyland

One importer, Armad Lorenzoni, who ran a big car distributor in Switzerland, said: ‘People here are losing confidence in British cars. We had a lot of problems with their engines, gearboxes and paintwork, and too often we had difficulty in getting spares. Getting the right kind of car in the right trim was very difficult. Now we read every day in the newspapers of strikes in the British car industry.’

Mr Lorenzoni’s firm used to import Triumph cars. Now they distributed Mazdas. He said: ‘When people lose confidence, they change to a make which they know will give them quick delivery, good quality and spares if they need them. With the Mazdas we sell now, there is only a four or five-day wait. And if there is any trouble, it is put right quickly. For instance, we had trouble with exhaust valves—so Mazda’s gave us a three-year guarantee. This gives confidence.’

In Germany, Karl Sautmann said: ‘Servicing and parts are difficult with British cars. It is much better to stick with a German one.’

Peter Stephens, chief of the Daily Mirror Paris office said: ‘The workmanship of British cars is not considered by Frenchmen to be as good as that of German cars. Service is very expensive and spares are difficult to get.’ In 1974 British imports into France were 1.3 per cent of the total, into Germany 0.6 per cent and into Italy (discounting Innocenti, which was owned by British Leyland) 0.4 per cent.

Mr Lines and the sub-standard Mini

Only two years earlier the same newspaper had reported on the case of Dennis Lines, a Vehicle Inspector who worked at Triumph in Coventry. He bought a Mini 1000 car for £855 through British Leyland’s discount scheme for staff.

He claimed he had spent seven days having faults rectified in the five weeks he had owned the car. He ended up with a list of 28 faults. Most of those complaints were about the paintwork, but he also had the rack-and-pinion steering replaced. In addition to this the handbrake did not work, the exhaust rattled, the heater was too noisy and the steering column made a grating noise.

There were other complaints about the car’s electrical system and bodywork. ‘We can all make mistakes. But my car should not have been allowed to leave the factory with this number of faults. I shall probably be unpopular for speaking out about a car made by my own company. But I believe you cannot stay silent if something is wrong,’ he said.

Dennis Lines had worked at Triumph’s Coventry plant since 1946. His car was made at Longbridge. ‘My complaints are not an attack on my workmates. I am criticising the system, which allows quality to be sacrificed for quantity. There is a lot of bad workmanship at British Leyland because some inspectors don’t bother any more. They seem to have been brainwashed,’ said Mr Lines.

British Leyland was shocked by this attack from one of its employees. ‘These complaints appear to be rather exaggerated. Quality is not being sacrificed for quantity, and it is certainly not true that our inspectors are brainwashed into letting faulty cars through,’ said a spokesman.

It was a disturbing story – if British Leyland could not produce a then 15 year old design satisfactorily, what hope was there for the newer models?

Born in Bedfordshire but now residing in Norfolk, Ian Nicholls is an ardent BL enthusiast. Currently he owns a Jaguar and two classic Minis. A stalwart of the Norfolk Mini Owners Club for nearly a decade he is an enthusiast for all things Issigonis. A stickler for historical accuracy he has recently performed the marathon task of mining the online newspaper articles for all BMC>MG related stories. Ian is unable to help with technical queries – he pays other people to fix his cars!

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38 Comments

There never was any hope whilst the crypto- and sometimes openly communists unions were in charge. Couples with management ineptitude the whole thing was as inevitable as the Titanic and the iceberg. Nobody comes out of this with much credit and most with no credit at all. I well remember the dreadful quality of BL cars in the 70s and 80s, the cars that had to be resprayed at the dealers before being sold, trim panels that routinely fell off and mechanical failures purely down to bad assembly.

I ran a series of BL cars, Triumph 1500, 2000 and Dolomite, Marina, MG Midget and Spitfire and a more than passing spanner-wielding acquaintance with an Al-Aggro. My last Dolomite was a Pageant blue 1980 1500HL (FPD806V)which was great when it was finally sorted but cost me a lot more than it should have, right down to the cracked exhaust manifold due to a faulty casting.

I chopped that one in on a Vauxhall Nova 1.2 saloon, which was pretty ugly from some angles and had a plasticy interior but was almost 100% reliable with the only bit replaced in 2 years being the windscreen wiper actuator rod. It also went just as fast as the Dolly and did 42mpg instead of 30. I never bought another BL car 🙁

One of the reasons for writing this article was in the aftermath of Baroness Thatchers death there was a lot of debate involving half forgotten memories of past events.
The only way to find out what really happened is to mine the newspaper archives which chronicle who said what and when.
They also reveal the mindset and aspirations of those involved.
It appears that in 1975 that the governing Labour party was in effect two parties in one. The leader and PM Harold Wilson was an election winner who preferred moderate policies that appealed to the centre ground where elections were won and lost.
However perhaps half his party now had a new idealogical leader in the shape of Tony Benn who had now moved to the left. Benn argued that nationalisation and state intervention had produced a landslide victory for Labour in 1945 and could do so again. Benn encouraged a fantasy where everybody would work together in harmony to create a better Britain. This article traces how that fantasy fell apart.

The whole company was a bloated monolith in the mid seventies that was producing cars more and more buyers didn’t want. Ford had success stories like the Escort, Cortina and the Granada that for the time, were reasonably well made, good looking and good to drive. Also Vauxhall was starting to shed its rust bucket image and producing competent products like the Chevette.
My family owned a 1974 Austin Maxi, built at the height of British Leyland’s troubles. While it wasn’t too bad mechanically, it was badly built, basic, thirsty and had all the driving qualities of a tank. We traded it in for a Toyota Corolla, which was completely reliable, economical and had such luxuries as cloth seats and a radio that the Maxi didn’t have. Also 40 mpg in an energy crisis was far better than the 28 the Maxi would do on a good day.
Much as I liked the Maxi as a load lugger and the kind of car you’d feel safe in a crash, it just wasn’t good enough.
Later on, when I could drive, I had a Rover 213 and one of the last Austin Montegos. The Japanese engined Rover was mechanically solid and very quiet on a long journey, but the tinworm got it and I had to sell it for spares. OTOH the Montego, probably one of the last cars to be made by the nationalised British Leyland, was a disaster. It was so unreliable it blew all its electrics when I switched on the stereo and as it was leaking oil, water and rusting to bits, a local scrappy gave me £ 20 for it as he said there was no market for them.

In the Derek Robinson picture, which is from 1979, the bearded gentleman on the right is Leslie Huckfield MP, who is quoted in the article.
Morris Edleman, Labour MP for Coventry North West, which included Jaguar, died in 1977. He was succeeded by ex Jaguar boss Geoffrey Robinson.

I would love it if AROnline could track down, and interview, the surviving key participants in this saga before they pass away and it’s too late…

An interview with ex-Leyland Cars Managing Director Derek Whittaker whom, I calculate, will now be 84 years of age, could broaden our understanding of why certain short-term decisions were taken at this key time which effectively resulted in Leyland Cars being rationalised to become Austin Rover and losing its clout as a truly ‘big’ automotive player.

For example, the decision to produce the Rover SD1 (launched while Whittaker was MD) in high volumes, build it to a low budget, and sell it a low price compared to those of its rivals, resulted in a poor-quality car which threw away all of the Rover marque’s brand values. The Rover name was never really trusted again.

To what extent, I wonder, does Derek Whittaker feel that those decisions were ones that he took and for which he was responsible? Or, does he feel that he was being micro-managed by others?

Andrew
I am trying to use the newspaper archives to articulate what actually happened and to try and make sense of it all.
Having written the Labour party manifesto, which said the government might take over financially stricken company’s, the plea for help from BLMC must have seemed like manna from heaven to Tony Benn and his supporters. Here was heaven sent opportunity to conduct a socialist experiment. Except that just as it got underway, Harold Wilson replaced Benn with Eric Varley.
Unfortunately the story gets worse, much worse.

With regard to the Princess, it was a car that was doomed to fail because it had been conceived for a different market segment to the market segment it ended fighting.

When it was being conceived British Leyland was being wrong footed by the Cortina Mk3, which had arrived in the market a whole size bigger and after a shaky start it redrew the market expectations. However although Ford increased the quantity and style, the performance and specification remained pretty much the same, as Ford retained the primitive engines, 4 speed box etc with a chassis focused on ride quality over handling. As a result when the Princess design was signed off the assumption was that the fleet car market would again size up but with still limited expectations for performance.

On that basis the Princess design makes a lot sense, at last the ADO17 would be right sized for the market and in its update to the Princess you can see this influence of the Cortina Mk3. The Princess showed plenty of modernity in its styling, however you can see in the detail the need to control cost, with features such as the bumpers, side lights, rear lights and door cards belonging on designs of a generation earlier. The same is true with the oily bits, the B series was a proven unit respected by the Fleet market, 4 speed gear box, stately performance with a soft and safe handling chassis would appeal to your average UK fleet manager who were always eager to avoid having their fleet wrapped around trees by the sales department.

However the UK economy burdened with the weight of the industrial unrest of the early 70’s and the Oil Crisis recession of 74 meant that Fleet market expectations remained static, may be if anything contracted slightly as can be seen with the Cortina Mk4 and Escort Mk2 which were little more than a re-skin of what came before.

This left the Princess pitched into the market above where it had been intended, but lacking the presence of a Granada or the sophistication and performance of its continental rivals. It’s a shame because it needed so little to make it right, you can see in the detailing on the SD1, such as its sculptured door inserts and wrap around lights that they did knew how to finish a modern European car if not build it. Plus for very little money an 5 speed Gearbox and 2 Litre E6 could have been engineered along with a chassis that had capability deliver so much more through nothing more than some tuning of tyre pressures and damping rates.

With hindsight, the SD1 could have covered the 2 litre premium market off with the addition of a Triumph slant 4 engine as it did later with the O series. The Princess would have worked better if the effort had been applied to the Maxi rather than the ADO17, a wedge Saloon and Estate (do we have any drawings of the Planned Princess Estate?) on a Maxi platform would have been the right size for the fleet market and represented a much more modern option that the Cortina Mk4 in the late 70’s, instead the Marina had to soldier on in this the UK’s most important Market segment.

I think the telling statistic here is that BL gave away virtually all its profits during the food times in dividends leaving it in the worst of all positions when the 74/75 recession struck. An outdated, poorly developed model range nobody wanted and no working capital to tide it over. Whilst shareholders ended up with shares worth next to nothing, the Government had effectively bank rolled their extortionate dividends by acting as a back stop to provide the funds the company needed to keep going after 1974. BL where not the only company to take this short term view. History is littered with once great British Companies that through greed ended up going to the wall. Knowing this I really do resent the Billions of tax payers money thrown at BL/ARG etc over the years. It really was money down the drain.

Paul H
The three day week of early 1974 ate away at BLMC’s cash reserves after a good 1973. The government was responsible for some of BLMC’s problems, albeit one of a different political complexion to the one that rescued it.

@Graham; Interesting take on the Princess, expecting another jump in market segments explains why it was so big. It’s surprising they had so much trouble developing it considering it used long serving engines and the chassis was ten years old. To my eyes it was a very modern and handsome design far ahead of anything in it’s segment, except perhaps the largely forgotten Mk1 Passat.

Not all in between sized cars failed though, the Marina sold fairly well and Citroen shifted loads of BX and GS. The only exec/large family car I can think of is the Volvo 850/V70, and perhaps the latest (worryingly obese) Mondeo.

Lots of things in Ian Nichols’ excellent blog, and the subsequent comments that I could argue with, but will confine myself to quoting one local Birmingham journalist who once admitted to me “When I look at some of my stories in print, I’m ashamed to think that one day they will be used for historical reference!”
What he was getting at was the fact that even if he got all his facts right (sometimes difficult under pressure of deadlines), he could almost guarantee that a sub-editor, who probably knew nothing about the story but had his own axe to grind, would impose his own interpretation. At worst, this could completely reverse the truth. So I’d counsel extreme caution in writing history from newspaper archives!!

The dividends were far from excessive, they only look excessive in relationto the profits because BL generated so small profits not paying excessive dividends.

Without paying dividends, ie offering its investors reward for the risk the investors were taking with their money, it would not have been possible to attract the extra investment it needed to fund the model program.

Obviously as the perceived risk of the business increased, the investors would demand a higher return on the money they lend the business. Eventually with a failing business you reach a stage where you no longer have sufficient profits to fund your debt, which is exactly where BL ended up.

However if you think this chapter is a horror story, wait and see what is coming in the next where we see what happens to the Governments money.

Ian
When the whole article is uploaded, you are more than welcome to post your side of the story.
I was expecting to get into trouble for sniping at the saintly Tony Benn, whom we are told is a national treasure.
I will admit to being a bit more jaded about BMC-Rover products after the family Rover 25 suffered from HGF.

A very sad story, when it was created in 1968, British Leyland had 40 per cent of the market and export sales were good due to mostly decent cars people wanted to buy. Ten years later, market share was down to 20 per cent, the product range was mostly outdated and often unreliable and export markets were drying up. Also endless stories about strikes, the night shift sleeping on the job and cars that fell to pieces after a few months, while exaggerated , tended to drive buyers away.
However, I do think James Callaghan’s more pragmatic approach to British Leyland after Benn’s follies in the mid seventies probably staved off the company’s collapse. Appointing a tougher managing director in the shape of Michael Edwardes, allowing hopelessly unproductive plants like Speke to close and finally trying to get to grips with the unions and quality control maybe avoided the company largely being closed down in the late seventies.

You go for it, Viscount Stansgate or Mad Wedge as he was better known contribution to Government was summed up by Harold Wilson when asked for his view on the potential New Labour Leaders all of whom had served in his cabinet, It was simply

He retired to Norfolk and was a customer in my post office.
Shortly before he died in November 2013 he told me he once owned an ADO71 Princess. It was also the worst car he ever owned, requiring numerous replacement parts, including an engine!

Truly excellent article! Thank you Ian.
Pipe dream no doubt but wouldn’t it be great to talk to Michael Edwards?
Looking (further) back it’s difficult to comprehend how we all accepted the 3 day week! Just imagine it happening now!
With regard to sources – I have no allusions about the accuracy (or not) of newspaper articles but rather would rely on memory and decent authorised books of the period. Using those sources, I find very little to argue with in any of this blog – pretty darned spot on I reckon!

I lived in Birmingham from 1971 to 1984, (a railwayman), and saw the whole thing gradually collapse. However, the whole country in this decade seemed gripped by a collective madness, it wasn’t just British Leyland. Every week there would be a strike somewhere; you really had to ask yourself whether somebody was putting something nasty in the water ! At the end of the 70s, I was in a railway office at Garston Dock, Liverpool on a night shift, (by then I had a railway job involving travel), and the subject of labour disputes came up, and an old supervisor said, “I think it’s about time the country settled down”, and this comment reflects the fact that at the end of this “Decade of Madness”, most people were just fed up with the constant strife, so it was no surprise Maggie Thatcher got elected, and then proceeded to shut down most of our industry, and hand the country over to the spivs and chancers of the City of London.

Interesting comments @21, people were so fed up with strikes and unions by 1979, they would back anyone who would try and stop them. While undoubtedly Maggie massively reduced the number of strikes and the unions faded into the background, the downside was a large increase in unemployment and while many companies that went under in the early eighties were uncompetitive, many decent firms went under as well.

The warranty rework on the Princess, from memory in 1977, one of them involved several days with the car in the dealers workshop, the work rerquired repositioning of the engine by either a redesigned subframe or mounting system, new drive shafts,steering rack, exhaust system, and quite a number of other parts, something to do with failing drive shafts or CV joints, perhaps I am thinking of another car.

Tht would be a 2200 – they had to move the engine about half an inch to get the CV joints in the driveshafts to last. The automatic transmission models were OK – they only sold “Special Six” auto trans 220’s while they worked out how to solve the problem.

Just imagine if British Leyland got it right in the seventies and the original Allegro design was used and the Marina replaced with the ADO77 and the SD1 was so successful BMW and Mercedes had to have a government bailout to survive. I could imagine British Leyland being as successful as VAG and the biggest player in Europe.
I would imagine the Austin name would be used on economy cars made in a joint venture with Suzuki in India, Morris would be used on a C segment car and vans, Triumph would be making sporting saloons aimed at the 3 series market, MG would be producing a latter day MGB at Abingdon, and Rover and Jaguar would be dominant in the D and luxury segment. Also while some production will have been shipped offshore, such as city cars and superminis( as has occured with Volkswagen), most of British Leyland would still be based in Britain and taking 25 per cent of the market.

@ Glenn. I wrote an article imagining pretty much that. It was such a fantasy you would think it was written by Terry Pratchet or David Gemmel. I sent it to Keith Adams in the hope he would post it in the Blogs section but alas it never happened. In fairness he probably read it and came to the conclusion of: What is this guy smoking, is it legal and if so where can I get some? lol

No one seriously wanted British Leyland to fail and die 40 years ago. This is why Tony Benn was right to intervene to save 180,000 jobs, and I am sure the Tories of this era would have done the same( Ted Heath intervened to save Rolls Royce in 1971). Remember British Leyland then was one of the biggest vehicle producers in Europe and had a market share of 33 per cent, the loss of such an important manufacturer would have been a huge loss to the country.
The reason why Tony Blair didn’t intervene to save Rover ten years ago was the company was no longer seen as viable, producing outdated cars that only 3 per cent of buyers were interested in. Also in 2005, unlike 1974, the country was in a relative boom and it was probably felt the 6000 workers at Longbridge could find other jobs.

It is often noted that the manufacturing techniques, in particular machine tools, within the British car industry were already out of date by the 1960’s compared with European rivals. So while Fiat, Renault, VW and others were yielding twice the number of cars per worker than BL could dream of, the inevitable happened. The three-day week was only the straw that broke a 20+ years out of date camels back.
Of course a huge workforce can produce large numbers but how does a company compete in the same market-place when its competitors invested in modern machinery?

The hard-left Tribune had a point, ”..Over a period of seven years, BLMC made a net profit of £74m and gave £70m of this away in dividends to shareholders..”
Possibly they were exaggerating and their idea of BL becoming some sort of car-industry Soviet is ridiculous, but in the world of politics and economics everyone has a valid point.

Were Renault shareholders taking a dividend as large as that through the 1950’s and 60’s? The R5 was a huge hit for Renault and add to its design a much more modern manufacturing technique than BL had at the time it is no wonder that a basic R5 had a good overall reputation compared to the very patchy rep’ BL models had.

I drive an Avenger so you can see how I am thinking with the following:

Rootes/Chrysler got a comprehensive 1960’s Factory re-fit in Ryton to manufacture the Avenger (Chrysler cash of course) so, for example, how did the units per worker compare in Chrysler UK to BL?
Chrysler UK had their problems too and would it prove the point that the Tribune made of lack of investment killing the British car industry if you compare (say) the ratio of workers per Marina in Cowley with workers per Avenger in Ryton.

Some good points there. Renault was owned by the French government, so no dividends were paid.
I have seen claims that BLMC invested milions in new manufacturing technology to build the Morris Marina of a type that was already being discarded by rival car firms.
In other words the company was wasting its precious funds on the wrong equipment to build the wrong cars. Perhaps the people to blame were Austin Morris managing director George Turnbull and his deputy, Bill Davis. Bill Davis had been BMC’s manufacturing director and in 1973 became BLMC’s manufacturing director.
Over the years a number of people were parachuted into BMC/Austin Morris, but they had to rely on the existing management culture to run the operation on a day to day basis.
If the existing management lacked the right training then problems were inevitable.

Too many things went wrong and all at the same time It would seem. The worst thing that happened was BL becoming a political football. The Left could complain about shareholders sucking away the profits, the Right could say the Unions were disruptive. Both parties had a point.
Fiats were rusty, so were most cars of the time. Difference being Fiat and Renault managed to make a profit. Then of course to a Frenchman or Spaniard, a Fiat 124 was a better driving prospect than a Marina, likewise a 128 compared with an Allegro. BL lost their export market almost completely. If it were not for Innnocenti a Leyland in Europe would have been a very rare sight.

So if BL was nationalized in the 1960’s would they have had more money to invest as per Renault? Or would Red Robbo and friends just have had a party as per Fiat? I would guess an early more planned nationalization of BL would have created a Renault/Fiat hybrid with the worst characteristics of both!

For sure the direction BL went with the Marina and Allegro double-act was clearly wrong. As this forum details and debates the massive mistake was trying to replace the 1100/1300 rather than developing it. When you look at the Australian Nomad and the Spanish Victoria you can so sadly see what BL should have been doing. As for the conventional RWD market, well they already had the Triumphs! Insane!! Like how difficult would it have been to lighten out a Dolomite body?

So, lack of investment + militant Unions + wrong cars = about £1billion (in 1975!) being sunk.
Ford must have been laughing all the way to the bank. Well as the old saying goes, ‘A camel is a Horse designed by committee.’

Great forum BTW, I will be honest and say that I am not a BL fan and I really enjoy ARO’s articles.

Interestingly Labour now have a leader whose views are stuck in the seventies and who, until he was elected leader in 2015, was regarded as a left wing irrelevance and stuck in a time warp. Now we have the successor to Tony Benn, Jeremy Corbyn, running a party that like the seventies is effectively two parties in one and divided between centrist Blairites and left wing Corbyn supporters.